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| | | | | | | | | | | | | | Share Price: | MYR4.70 | Target Price: | MYR5.03 | Recommendation: | Buy | | |
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| | | A beneficiary of stronger Ringgit | | IOI is a beneficiary of the strengthening Ringgit (MYR). This will be evident from its 2QFY6/18 headline net profit which we estimate at MYR550m (2QFY6/17: MYR16m), lifted by FX translation gains (e.MYR200m) and higher core profits (e.MYR350m), bringing 1HFY6/18 headline net profit to e.MYR910m (1HFY6/17: MYR120m). Maintain trading BUY with an unchanged TP of MYR5.03 on 29x FY18 PER (its historical 5-year mean). A 12.5sen special DPS awaits investor post completion of Loders disposal. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 11,739.3 | 14,127.3 | 13,210.4 | 13,573.6 | EBITDA | 1,494.6 | 1,603.8 | 1,970.2 | 2,132.7 | Core net profit | 951.5 | 1,022.8 | 1,090.7 | 1,222.1 | Core EPS (sen) | 14.7 | 16.3 | 17.3 | 19.4 | Core EPS growth (%) | 27.8 | 10.5 | 6.6 | 12.0 | Net DPS (sen) | 8.0 | 9.5 | 8.7 | 9.7 | Core P/E (x) | 31.9 | 28.9 | 27.1 | 24.2 | P/BV (x) | 4.3 | 4.0 | 3.7 | 3.4 | Net dividend yield (%) | 1.7 | 2.0 | 1.8 | 2.1 | ROAE (%) | 8.9 | 10.0 | 14.1 | 14.7 | ROAA (%) | 5.6 | 5.7 | 6.0 | 6.6 | EV/EBITDA (x) | 22.6 | 21.2 | 17.7 | 16.0 | Net debt/equity (%) | 73.4 | 75.4 | 60.1 | 48.4 |
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| | | | | | | | | | | | Share Price: | MYR9.18 | Target Price: | MYR8.11 | Recommendation: | Sell | | |
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| | | Disposes entire 11% stake in Hyderabad Airport | | MAHB has entered into a sale purchase agreement (SPA) to sell its entire 11% stake in GMR Hyderabad International Airport Limited (GHIAL) to GMR Airports for USD76.05m (MYR295.34m) cash. This SPA is based on a willing-buyer, willing-seller basis and will be settled by 1 Dec 2018. This is positive development as it allows MAHB to focus on its core operations and reduce its gearing ratio. We raise our TP to MYR8.11, which includes 15.4sen net gain from this asset disposal. MAHB remains a SELL. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 3,870.2 | 4,172.8 | 4,545.0 | 5,266.0 | EBITDA | 1,342.0 | 1,488.9 | 1,642.6 | 2,106.3 | Core net profit | (113.3) | 48.2 | 234.6 | 385.2 | Core EPS (sen) | (7.1) | 2.9 | 14.1 | 23.2 | Core EPS growth (%) | nm | nm | 386.7 | 64.2 | Net DPS (sen) | 1.0 | 1.7 | 8.3 | 9.0 | Core P/E (x) | nm | 316.0 | 64.9 | 39.5 | P/BV (x) | 1.7 | 1.8 | 1.7 | 1.7 | Net dividend yield (%) | 0.1 | 0.2 | 0.9 | 1.0 | ROAE (%) | 0.5 | 0.8 | 3.6 | 7.8 | ROAA (%) | (0.5) | 0.2 | 1.1 | 1.8 | EV/EBITDA (x) | 10.1 | 9.4 | 11.7 | 8.5 | Net debt/equity (%) | 52.2 | 46.1 | 45.2 | 30.1 |
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| | MACRO RESEARCH | | | | | | US Markets – Temporary Setback as February Still Favours the Bulls
by Nik Ihsan Raja Abdullah |
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| | | | | | We had forewarned that the US markets could consolidate (refers to Regional Traders' Almanac dated 25 Jan 2018). True enough, both Dow Jones Index & S&P 500 Index nosedived last week. Looking at the still-weak indicators, we believe the near-term trend is still down. INDU Index could potentially head towards its next support levels at 24,900 and 24,000. That said, the index has always ended higher in February since 2010. | |
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| NEWS | | | Outside Malaysia:
U.S: Adds 200,000 jobs; Wages rise by most since recession. U.S. hiring picked up in January and wages rose at the fastest annual pace since the recession ended, as the economy's steady move toward full employment extended into 2018. Nonfarm payrolls rose 200,000 after an upwardly revised 160,000 advance, Labor Department figures showed. The jobless rate held at 4.1%, matching the lowest since 2000, while average hourly earnings rose a more-than-expected 2.9% YoY, the most since June 2009. (Source: Bloomberg)
U.S: Consumer sentiment tops estimates on jobs and income. U.S. consumer sentiment exceeded analyst estimates in January as the outlook for jobs and household income improved, University of Michigan survey data showed. Sentiment index inched down to 95.7 from 95.9 in December; preliminary reading was 94.4. Current conditions gauge, which measures Americans' perceptions of their finances, dipped to 110.5 from 113.8 in the prior month; preliminary reading was 109.2. Expectations measure advanced to 86.3 from 84.3. Year-ahead inflation expectations were unchanged at 2.7%. (Source: Bloomberg)
U.S: Williams says Fed should stick to plan for gradual rate hikes. San Francisco Fed President John Williams, who is said to have has been interviewed in connection with the post of Fed vice chairman, said "we need to continue on the path of raising interest rates" to keep U.S. economy with above-trend growth on "an even footing" and reduce the risk of overheating. FOMC should "stick to that plan" for gradual hikes, "is well aware" of consequences from knee-jerk reactions, Williams said in text of speech in San Francisco. (Source: Bloomberg)
Crude Oil: Extends losses as U.S. rigs jump to most since August. Rigs drilling for American crude rose by 6, to 765, the highest since Aug. 11, according to Baker Hughes data released. Iran can swiftly increase oil production if OPEC decides to scrap limits on global output when the group meets next in June, Oil Minister Bijan Namdar Zanganeh said. Brent for April settlement was USD 68.14/bbl. (Source: Bloomberg) | |
| | | | | Other News:
Kelington: To undertake private placement. Kelington has proposed to undertake a private placement exercise of up to 10% of its share capital to raise MYR18.76-RM23.31m to finance its new venture in the industrial gas segment. Kelington plans to deploy between MYR6.86m-MYR8.07m for the purchase of assets for the industrial gas division and MYR4.0m-MYR4.60m to partly finance the subsequent phase of construction of a carbon dioxide gas purification plant,gas manufacturing facilities and gas delivery systems, while MYR3.0m-MYR3.5m will be used to partly finance the acquisition of carbon dioxide gas purification plant. (Source: The Sun Daily)
T7 Global: To invest MYR200m in metal plant. The group will be investing about MYR200m in its metal treatment plant in Serendah over the next three to five years. The plant, located in the UMW High Value Manufacturing Park and set to cater for the aerospace industry, is expected to be completed by the end of the year, said the group's executive chairman. The plant is undertaken by T7 Kilgour S/B, a 60:40 joint venture (JV) company between the group's aerospace arm T7 Aero S/B and KOV Ltd, a wholly-owned unit of UK-based Kilgour Metal Treatments Ltd. (Source: The Edge Financial Daily)
SCH: Diversifies into event equipment business. The group is entering the event equipment supply business segment to diversify its earnings base and enhance its top and bottom lines. The group today signed an agreement with Hextar Holdings S/B to acquire the entire equity interest in TK Tent & Air-Conditioning Rental S/B for MYR50m. This will help diversify SCH's income stream which is currently mainly derived from the quarry equipment business and is dependent on the cyclical nature of the construction industry, the group said in a stock exchange filing. (Source: The Edge Financial Daily) | |
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